Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Finance (Senator Cormann) to a question without notice asked by Senator Gallagher today relating to housing affordability.

Earlier in question time, I asked a fairly straightforward series of questions around the issue of housing affordability around the country, particularly about house prices in Sydney and Melbourne. Median house prices in Sydney now exceed a million dollars and median house prices in Melbourne are certainly going very close to that. We are also seeing the average mortgage size for both those cities exceeding $400,000 for the first time. At the same time, the level of first home owners as a percentage of owner occupiers has declined to 15 per cent from the long-term average of 19.7 per cent. Around a million people across Australia are living every day in housing and mortgage stress. This is the picture of housing affordability for many Australians. It is simply becoming unaffordable.

Over the last 2½ years the response from the federal government has been completely and totally inadequate. The response has been one of disinterest and of referring to the states and territories. The view of the federal government appears to be that they have no active role to play in ensuring that housing remains affordable for a whole range of groups across the community. This is the challenge that is presented. It was clearly outlined in a very comprehensive report of the Senate Economics References Committee which reported over 10 months ago. Earlier this week we received a letter from minister responsible, saying that the response which was due approximately seven months ago will not be forthcoming in the foreseeable future.

In response to the questions that I asked today, the minister did touch on the fact that they are working with states and territories to look at possible initiatives which might improve the supply of housing. The coalition went to the last election with its 'real solutions' statement, saying they would work with states and territories to improve the supply of housing. And yet, a few months before an election, 2½ years into a term, nothing has been done. In January this year a working group was established. More than two years following the election of the government they established a working group—at the request of state and territory treasurers, I might add; I am not sure they would have done it had it not been requested of them—to look at financing arrangements for the supply of housing and at affordability initiatives.

Interestingly, this working group—which does not include anyone from the affordable housing sector, community housing sector, social housing sector or industry—will report to heads of Treasury on 30 July this year, with a report to government probably sometime after that. What this says, and what the minister confirmed today in his answers, is that the federal government really does not see that it has any role to play in addressing the issues of unaffordability of housing across the country. They are prepared to do nothing for an entire term, to have a failed federation white paper process, which looked at some of the issues but then decided they were too hard. They stopped that, they started a working group and ensured that it will not report until after the election, and they pretend that they are doing something about it. There has not been a single initiative by this government to improve affordable housing across this country. In fact, it is the opposite. They have abolished the National Housing Supply Council and they have withdrawn $44 million in capital funding from the National Partnership Agreement on Homelessness. We have 105,000 people who are homeless every night in this country, and we have homelessness groups that operate on the smell of an oily rag—with no long-term certainty about their funding future because there is no long-term strategy to deal with the issues presented by homelessness and the numbers of people who are increasingly being locked out of the housing market.

Others are now speaking of 'generation rent'—the people who will never buy a house in this country. The federal government has no interest at all in these people. (Time expired)

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

I find it ironic when I hear Senator Katy Gallagher talk about this. You only have to read today's editorial in The Canberra Timesto look at who is actually to blame for high house prices. It certainly is local Labor governments—ACT Labor governments and other Labor governments. The editorial reads:

Canberra land prices have surged to record levels as a result of unprecedented population growth and the government's tacit policy of drip-feeding land releases.

We know that they deliberately push up the cost of housing in the ACT. They do it under the current Chief Minister and they did it under the former Chief Minister, and then she comes in and cries crocodile tears about it.

There is another thing that pushes up the cost of housing in the ACT, and that is union corruption and the cartel behaviour that we have seen exposed at the trade union royal commission. I will read from a press release from the Master Builders Association about the impacts of this type of corruption and the impacts of these types of dodgy deals which encourage this cartel behaviour, which encourage price fixing and which see the costs going up, making housing less affordable. The media release calls for a return to competitive tendering. I will quote some bits from the master builders. 'This is supposed to be a highly competitive negotiation between a client and provider. Now we see it is a three-way process that also involves a union tip-off and pay-off. In construction services the union has a direct commercial interest in who wins and who does not win government tenders. Their huge wealth and power has been built on forcing Canberra's construction industry into the woefully anti-competitive pattern agreements that delivered $1.2 million in direct profits to the CFMEU ACT in 2013-14 alone. Secretly inviting them to participate in tenders as a third party corrupts the entire process and leaves ACT taxpayers to foot the bill. The ACT government must move to scrap the MOU and return the territory to a competitive commercial tender process.' That is something that could be done about it. You could scrap these dodgy deals which encourage price fixing, which we heard about at the union royal commission. You could release more land, which successive governments—Labor governments in particular, right around the country—have failed to do. And you certainly would not allow the kind of price fixing and standover tactics that we have seen exposed at the royal commission.

These things have a real impact. They have a real impact on small business and on people within the construction industry. But the flow-on is into higher prices, and we see that, whether it is in the construction of roads or in major commercial projects. It also flows into the construction of new homes, and we saw evidence of this. Ewin Hannan wrote a very good piece about this entitled 'How the CFMEU captured control of Canberra's building industry', and he goes into some detail on some of the evidence that we heard from the royal commission. He talked about how the Competition and Consumer Commission, which enforces anti-price-fixing laws, said it will use a special unit to investigate the CFMEU's behaviour in Canberra. We heard evidence of price fixing. Mr Josifoski described his meeting with the CFMEU. Evidence was given about corrupt payments made in cars, cafes and restaurants and these kinds of standover tactics, but this particular evidence was about price fixing in the industry—price fixing which encouraged contractors to pay more than they could afford. It would flow in, they would all agree on the price, and guess who in the end has to pay for it: the consumer. It is the consumer. It is those seeking to buy a home. It is those investing in property, or it is governments and others—and taxpayers in the end—who are paying for infrastructure who pay for these sorts of things.

I repeat a couple of the points that I made yesterday. If you are going to engage in these kinds of dodgy deals where you empower this kind of corrupt behaviour, you will get all sorts of dodgy outcomes. Not only do you empower the corruption but you also have real impacts on real people. In this case, if Labor wants to talk about housing affordability, it is these kinds of dodgy deals—in this case between the ACT Labor government and Unions ACT and unions like the CFMEU—which push house prices up. So, if you want to see prices come down, stop doing the dodgy deals, get out and release more land so that there can be affordable housing not just here in the ACT but right around the country. (Time expired)

Sue Lines (WA, Australian Labor Party) Share this | Link to this | Hansard source

The ignorance of the Turnbull government when it comes to housing affordability, demonstrated by the answers to questions we asked today on housing affordability in this place, is astounding. We had last year the first ever rental affordability index, and it revealed that there is a deep crisis in rental accommodation right across Australia. In fact, many Australians who are renting are paying 65 per cent of their total weekly wage towards rent. If that is a crisis that those opposite want to ignore then again it just shows how ignorant they are when it comes to the actual facts around what is going on.

Of course, the worst hit are low-income earners, and now that crisis of rental affordability is spreading to middle-income earners. Coupled with that, we also see now a decline in the new housing market. Fewer Australians are able to afford a house. And why? Because almost half the houses sold in Australia now are going to speculators, because the negative gearing and capital gains tax policies that are in place are way too generous. They are distorting the market. Those two levers are under the direct control of the federal government, and they sit on their hands. In fact, housing affordability has got much worse under the Turnbull government. They have never had a housing minister and they have never had a housing policy. Despite the very early promises of Mr Kevin Andrews that there would be one, there has never been one, and those are absolute facts.

Then they try to say that Labor's very solid negative gearing policy—which will come into effect, if we are in government, in 2017 and which will grandfather people who already have houses; it will apply to the new housing market—is somehow skewed. What is skewed is the Turnbull government trying to pretend in this place that somehow housing affordability in this country is someone else's responsibility. When they sit on the two levers that are directly impacting the housing market in this country, that is pure ignorance.

Labor will act to do something about making sure that low-income and middle-income earners can at least afford to live. When you pay more than 30 per cent of your household income in a mortgage or rent, you are in stress. We have many, many Australians now paying 65 per cent of their income, so how do they afford to eat, to put fuel in their car or to get on? The simple answer to that is that they do not; they fail to make ends meet.

The other point that you never hear those opposite talk about is that those incentives that are currently there for negative gearing and the capital gains discount are costing our economy $10 billion. That is more than we spend in education or child care. They should hold their heads in shame, but we know that they would rather enable people to buy their seventh or eighth house than help people in to buy their first house, or indeed help those who are currently struggling with rental affordability.

It is worse than them doing nothing. They sit on the two big levers that they are doing nothing about. The Treasurer has absolutely no idea what is happening on the tax front. Not only that—they trashed, burned and cancelled the good policies that Labor had in place to keep, particularly, rental in place. The capital gains tax concession is growing at eight per cent a year. That is not a number to be proud of. That is making it much harder for ordinary Australians to have fair rents and to get into the housing market. That rate of growth at eight per cent is greater than the rate at which we fund research, our universities, our VET providers and our schools, and the government want to sit on their hands. And why is that? Because they only look after their rich mates—their mates at the big end of town. That is who is being advantaged here, and meanwhile they try to pretend that the Australians in rental stress, paying huge amounts in rent, are somehow somebody else's problem. Those two levers—capital gains and negative gearing—are completely within their control, and they are having this internal fight—'Will we or won't we?' They are absolutely ignorant when it comes to housing affordability, and they should be ashamed. (Time expired)

James Paterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to rise to speak on this issue because I am from the generation that struggles with this issue. A phrase was used before: generation rent. I am generation rent. My wife and I are currently saving our deposit to buy our first home. We know how hard it is. We know the challenges that young people in Australia are facing in the housing market, but the reality is that those opposite have absolutely no answers and no understanding of the real causes of housing unaffordability.

All of the international evidence shows that the most powerful thing that you can do to improve housing affordability is to increase the supply of land. This is not a recent issue. This is not an issue which only Australia faces. This is a widely studied issue. There are reports put out each year that look at all the different factors that affect housing affordability, and every time they conclude that jurisdictions which have an easy and open supply of land and less restrictive planning restrictions on what you can do on that land are also the jurisdictions that have the most affordable housing. It is not a coincidence that Australia, with some of the worst land release policies in the world and the most restrictive planning regulations on what you can do on that land, has some of the least affordable housing in the world.

Of course, that is not something which is in the control of the federal government. Whether senators opposite like it or not, we live in a federal system, and, unless you are proposing a referendum to change the Constitution to give the federal government control over the supply of land and abolish state governments, there is a limited amount that the federal government can do to improve that. It rests on state governments to release more land and to reduce the regulation on planning to allow people to do more on that land if you want to improve housing affordability.

I find it particularly ironic that this issue was raised today by the former Chief Minister of the ACT. The ACT is not exactly renowned for record housing affordability, good land release policies or light regulation on planning. In fact it is the opposite. Despite being one of the wealthiest and highest income jurisdictions in Australia, it faces some one of the most severe housing affordability stresses in the nation. Those opposite will do well to look in their own backyard and what they have contributed to this issue.

Those opposite do suggest, though, that we should look at negative gearing as a possible solution to this. This is a an absolute fallacy of economics. In which other market would we try and control the demand to improve the price? If we had an issue of the affordability of bread, would we put a tax on bread to make it more affordable or would we look at measures to increase the supply of bread to make it affordable? It is absolute economic lunacy to put a tax on something in an effort to make it more affordable. Of course, the negative gearing policy does not only apply to housing. It also applies to shares. This is part of the grand plan to improve housing affordability: remove the tax deductibility for shares that are making a loss. This a kind of harebrained economic thinking that is going on in the Labor Party at the moment.

Capital gains tax is highly renowned around the world as one of the least efficient forms of raising revenue. Around the world, countries are looking at abolishing and cutting capital gains tax, and yet we have the Labor Party in Australia recommending that we increase capital gains tax—again sheer economic lunacy. One of the suggestions of those opposite is that maybe this will be improved if we had a housing minister. The previous federal Labor government had a housing minister, and how did that work out? How did that improve anything for my generation? How did that make housing more affordable? This is typical of the attitudes of those who think that the federal government and governments generally can fix all the problems that we face and that, if we only appointed a minister for it, it would improve. The housing minister in the previous government did not do such a bang-up job in fixing this problem, so I have no confidence that a new housing minister would fix it either.

This is a serious issue and it is one that particularly affects my generation, but this is an issue that will be solved at the state level by state governments releasing more land and reducing the regulations on planning so that people can do more on their land. The best way to solve any affordability problem is to increase supply, and in a federal system of government, that is the responsibility of our states and local councils. The solution to this issue is not higher and increased taxes. It is not fiddling with negative gearing, which the Prime Minister has very eloquently described as 'the greatest assault on economic freedom' in his lifetime. It is certainly the greatest assault on economic freedom in my lifetime. This is a measure which is used largely by middle- and low-income people to improve their lives, to invest and to pass on wealth to their children, and I do not think that is something that should be closed off to them. I am very proud to be part of a government that is defending those who want to invest in housing and improve the wealth of their families. Thank you very much.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I look forward to making my contribution to take note of the questions asked by Senator Gallagher to Senator Cormann. Before I do, I have to clear up a couple of things. I know the new senator has replaced Senator Ronaldson. We are all on the same swing and we will be up at the next election. This is not good news. The unfortunate thing is I have kids the same age—I wish I was your age!—that are struggling to try and find and buy a house. Through you, Mr Acting Deputy President: Senator, I know that you are No. 1 on the ticket, but I also know that you are paid $200,000 a year like we are as well. I also know that means you are going get at least seven years, so you will be right mate, and good luck to you.

Now I have that off my chest, I will clear a few things. I have three rental properties and I have my own on home. I can tell you that, when my wife and I first started, we had no chance. In fact, her mother gave us a good suggestion and said: 'Look, you have only been married a couple of months. You are renting a place in Ferndale, in Perth's eastern suburbs, trying to pay off a truck. You can't afford it. Would you like to move in and live with us for six months so you can save some dollars,' so I could go back to the Commonwealth Bank and plead for a loan. I have to tell you that that six months turned into 2½ years before they threw us out—joking! I was getting very comfortable. We were able to afford to buy a block of land.

I am in a very good suburb in Perth, just out of Fremantle, called Cardinia. I remember when my wife and I bought that block of land and then had to save for another 2½ years before we could build on it. I had no idea how I was going to pay $28,000. I was actually stressed because my truck was worth $32,000. But to sit there and actually put our heads in the sand—I struggle with this. The kids are now off our hands. We have been able to save a few bob and invest in rental properties. It is a great thing because I am thinking to myself: 'You know what? I am going to give my kids a property each.' But then I sit and I struggle with this, thinking: 'Hang on, let's say it as it is. It's not a bad tax loop to negative gear.' Some people might want to throw rocks at me, but I have to get this on the record. I have used the system and it is not illegal. But I am really struggling with it now when I look at my 25-year-old and my 28-year-old as they are desperately trying to enter the housing market.

My daughter—God bless her, I love her dearly—just got married. She and her husband have a unit in Subiaco and they have had to scrounge and scrimp to put together every single cent they can to get this unit. Sadly, unlike a lot of our generation, today the younger generation would love to start a home—that being four bedrooms, two bathrooms, a studio, two cars in the driveway and international holidays every six months. That is great if you can get it! But we really have to put the interests of the next generation first. We should explore every avenue there is to do whatever we can to make housing affordability one of the No. 1 issues in this nation, because not every young Australian is going to have the opportunity to earn what we earn. It would be lovely if they could! Therefore, I want to make it very clear that I will support and endorse, fanatically, any policies that give our younger generations the opportunity to enter the housing market.

When you look at my home town of Perth, it is a classic example of where we enjoyed the benefits of the mining boom—that mad 10 years. No-one talked about housing prices around the barbecues in Perth—it was your football team or whatever it may be—until the boom started. It got embarrassing, and I think that Senator Wang would actually agree with me here. I think he would. It got to the stage where I was not interested in listening to Western Australians who would start every conversation at the barbie with how much their house was worth! It just went crackers!

We all fell for this thing, 'Oh well, I bought my house for 20 grand and it is now worth 180 grand!' They did not think, 'Hang on—if I want to sell it and upgrade where the heck am I going to get the money from?' It went ludicrous. If you look at our home state—Senator Wang and I—and in Perth: for young people to be able to afford a piece of land to put a nice little three-bedroom, two-bathroom cottage on we are talking about going 30 kilometres out of the city. That might not be a lot for those from New South Wales but I have to say that when you see young people balancing wanting to start a family, wanting to have their own residence and trying to juggle two wages until the pregnancy comes along and then one, it is damn frightening.

We need to grow up. It is now time to put the interests of the next generation first, not our own. (Time expired)

Question agreed to.